Stone: unit cost will again be on a downward trajectory next year
The number of complaints against lawyers that reach the Legal Ombudsman (LeO) has fallen to its lowest level since the organisation opened in 2010, its annual report has shown.
In the year to 31 March 2016, LeO accepted 7,033 complaints for investigation – down from 7,635 in 2014-15 and 8,323 the year before – and resolved 6,416 cases, a fall of 14% (7,440 in 2014-15, 8,055 in 2013-14).
Residential conveyancing, family, personal injury, wills and probate, and litigation were the most complained about areas of law.
LeO’s budget has also gone down, for the fifth year running, from £12.2m to £11.6m. At the same time, the unit cost – that is, the cost per complaints – has increased slightly.
The Office for Legal Complaints (OLC), the body that oversees LeO, said that this was mainly because of the reduction in complaint volumes, along with the employee flexible benefits scheme that has now been closed but was part of the governance issues it has struggled with in recent years.
“I expect that unit cost will again be on a downward trajectory in the next financial year,” said chief ombudsman Kathryn Stone.
The lingering effect of the benefits scheme and also the questions over the expenses of former chief ombudsman Adam Sampson means that the OLC’s accounts have been qualified yet again, but it said this should be the final time.
As previously reported on Legal Futures [1], LeO has failed to meet its timeliness targets – resolving 40% of cases within 56 days, 70% of cases within 90 days and 95% within 180 days.
Ms Stone said these targets were “a legacy of the scheme’s original performance philosophy”, which “over-emphasised rapid resolutions, leading to a sacrifice in quality”.
The quality target, by contrast, was well exceeded. Some 60% of complainants and lawyers were satisfied with the service they received, irrespective of case outcome, against a target of 40%.
Ms Stone said: “We are implementing specific measures to improve quality and timeliness, and working to improve the overall consistency of our decisions. We can get a better view of whether we are succeeding in this area having changed the way we measure customer satisfaction.
“We now seek the views of customers at different stages of our complaints process to get a well-rounded view on each customer’s experience. This means the feedback is no longer shaped by the outcome of a customer’s complaint.”
The annual report includes details for the first time of LeO’s relatively new jurisdiction over claims management companies. During the 2015-16 financial year it accepted 2,438 cases for investigation and resolved 1,740 complaints, mainly in relation to financial mis-selling cases.
LeO recently accused lawyers [2] of still failing in their regulatory duty to tell clients about the right to complain to it and the annual report took up this issue.
“A lack of signposting has arguably contributed to an overall reduction in awareness of our scheme,” it said. “Our reputation KPI shows that just 56% of people who have used a legal service in the past year had heard of our scheme compared to 78% two years ago. Likewise, in the claims management sector awareness of the Legal Ombudsman has gone down among users of CMCs. We are working closely with both industries to reverse this trend.”
Steve Green, chair of the OLC board, said: “The last business year has been the most important for the OLC board since its original set up. The board and the ombudsman’s senior management team have had to work hard to rectify the issues that led to this and the previous annual report and accounts being qualified by the National Audit Office. I’m pleased to be able to say these issues now belong firmly in the past.
“As the report shows, the Legal Ombudsman has been placed under new leadership and the performance framework of the service has been significantly re-worked. I’m confident that the scheme has a bright future as a result.”
Separately, LeO is also reviewing its rules [3]. Among the areas it is looking at are whether to allow complaints from small businesses larger than those currently allowed to use LeO – ‘micro’ enterprises with fewer than 10 employees and turnover or assets not exceeding €2m – and whether to activate a power in the Legal Services Act 2007 that would allow it to order costs against either a complainant or a lawyer deemed to have acted unreasonably in their conduct of the complaint.
It is also looking once more at how it levies case fees. At the moment, the lawyer has to pay a £400 fee if a complaint is upheld, but it is waived if an ombudsman agrees that the way the lawyer or firm dealt with the complaint, and the remedy they offer, was reasonable.
The proposed alternative would introduce a three-level fee scale depending on which stage of LeO’s investigation the matter concluded in favour of the complainant.
If a complaint was informally resolved, a level 1 case fee of £200 would apply. If a complaint is informally resolved after a preliminary decision has been written, it would be a level 2 fee of £450. If a complaint progresses to an ombudsman decision, the level 3 fee of £750 would be levied.
The new plan would contain some exceptions too. For instance, even where an ombudsman decision has been required, a service provider would receive a level 2 fee if the remedy was the same or less than the service providers’ initial offer or, similarly, if the service provider had accepted the preliminary decision and it was the consumer who took the complaint to a formal decision.
Without factoring in behavioural changes that this system might engender, LeO estimated that it would still raise the £1.25m it does now, representing about 8% of its budget.
The alternative suggestion was to retain the current regime but uprate the case fee by inflation.